Expansion costs hold back Vodafone: Pre-tax profits up 9% - Losses from start-ups in Europe and Asia expected to peak at pounds 50m

START-UP losses in overseas markets depressed Vodafone's margins in the first half and will continue to cause a drag in profit growth in the short term. The overseas loss was pounds 13m in the six months to 30 September and is expected to widen to pounds 25m by the end of the year.

Gerry Whent, Vodafone's chief executive, said that overseas losses would peak in 1994/95, when they could reach about pounds 50m. He added: 'We are confident that the benefits of our expansion overseas will be reflected in future performance.'

The company has interests in mobile telephone licences in Sweden, Denmark, Germany, France, Greece and Australia. Targets for growth are Italy, the Netherlands, Belgium, Spain and the Asia-Pacific region.

Vodafone made pre-tax profits of pounds 174.5m in the first half of the year, 8.9 per cent above the figure for the same period last year. Turnover rose by 21.9 per cent to pounds 389.8m and earnings per share rose by 8.7 per cent to 11.7p from 10.76 a year ago.

The interim dividend rose ahead of City expectations by 20 per cent to 4.12p compared with 3.43p at the same time last year. Mr Whent said the increase reflected the underlying strength of the business. 'As far as dividends are concerned we are ignoring overseas start-up pains,' he said.

In Britain Vodafone has added 130,000 net new subscribers in the financial year so far, which represents an increase of 130 per cent over the same period last year.

More than 76,000 of the subscribers are business customers and 50,000 are on the cheaper LowCall package.

Vodafone's digital cellular telephone service, with 4,500 subscribers, has taken off more slowly than expected because of a shortage of telephones, and price-cutting in the analogue service.

Vodafone shares closed 7p up at 527p.

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